CONSTRUCTION firm Rok has been criticised by a business support group for doubling its standard payment terms to 60 days.
It is the latest firm to be added to the Forum of Private Business’s (FPB) Hall of Shame, after it informed its suppliers that future agreements would be subject to 60-day terms, rather than 30.
But a spokeswoman for Rok refuted the implication, arguing that the move to would not change the payment terms for the “vast majority” of its suppliers.
She said: “Rok is not changing its payment terms in respect of existing contracts, but has said that any new arrangements with sub-contractors will be negotiated on the basis that our standard terms are now 60 days.
“In fact, the vast majority of our suppliers are already paid on these terms, which are in line with the majority of our industry.
“The only change we are making is to ask our businesses, where they are negotiating new contracts, to make it clear that 60 days is now the standard.
“Clearly it is not in our interests to upset or disadvantage our supply chain partners, with whom we have excellent relationships and on whom we rely to help us deliver an efficient service which is why no changes are being made to existing arrangements and why the terms for all new arrangements will be made clear from the outset.”
Rok, which has offices at Brunswick Business Park and Dunkirk, Chester, made cost savings of £30m in 2008, but still saw profits slump 76% to £5.9m, on revenues of £1.01bn.
The FPB – which is campaigning to change the UK’s culture of poor payment – has written to the company inviting it to sign up to the Government’s Prompt Payment Code, where companies pledge to “pay suppliers on time without changing practice on length of payment for smaller companies on unreasonable grounds”.
Nick Palin, the FPB’s director of finance and administration, said: “Small businesses are bearing the brunt of the slump in the construction sector.
“It is not reasonable for big businesses to pass on costs incurred via changes to payment terms and conditions further down the supply chain.
“In the current economic climate, this behaviour can force small firms to cease trading altogether.”
